Canada’s largest pension fund, Canada Pension Plan Investment Board (CPP Investments), committed over $3.77 billion to direct and indirect investments in Asia in the fiscal ended March 31, 2023, according to a recent disclosure.
The pension fund spent over $2.5 billion on primary and secondary investments in regional companies. During the year, it also earmarked over $1.2 billion for capital commitments to Asia-focused funds.
Fund commitments by CPP Investments in FY ended March 2023
| Fund | Fund manager | Investment amount (in USD) |
|---|---|---|
| Kotak Infrastructure Investment Fund | Kotak Investment Advisors | C$310 million ($223 million) |
| Carlyle Asia Partners VI | Carlyle Group | $400 million |
| IndoSpace Logistics Park IV | IndoSpace | $205 million |
| Baring Private Equity Asia EQT Mid-Market Growth Fund | BPEA EQT | $100 million |
| Bain Capital Asia Fund V | Bain Capital | $300 million |
Source: CPP Investments, DealStreetAsia
Direct Investments by CPP Investments in FY ended March 2023
| Company | Investment amount (in USD) | Geography |
|---|---|---|
| China Tourism Group Duty Free | $292 million | China |
| Mezzanine loan backed by a sponsor-owned, Grade-A office and retail property | $75 million | China |
| Shandong Fengxiang | $78 million | China |
| Japanese Data Centre Development | C$322 million ($236 million) | Japan |
| IIFL Wealth | $53 million | India |
| Viewpoint Software | $40 million | Malaysia |
| EcoCeres | Undisclosed | Malaysia |
| Tricor | $180 million | Hong Kong |
| Z Holdings | C$459 million ($337.4 million) | Japan |
| ReNew Energy Global | C$925 million ($680 million) | India |
| IndInfravit Trust (commitment to fund acquisitions + secondary transaction) | C$786 million ($577.8 million) | India |
Source: CPP Investments, DealStreetAsia
During the fiscal year 2023, CPP Investments allocated $292 million for a 9.3% stake in the Hong Kong-listed shares of China Tourism Group Duty Free and provided $75 million in a mezzanine loan backed by a sponsor-owned, Grade-A office and retail property in Shanghai. The pension fund also partnered with Asian private equity major PAG Asia Capital to invest $78 million in Shandong Fengxiang, a China-based poultry meat product manufacturer and producer.
“Exposing the fund to the Chinese market gives us access to one of the world’s largest and fastest-growing economies in such sectors as consumer discretionary spending, logistics and real estate,” Michel Leduc, CPP Investments’s senior managing director and global head of public and corporate affairs, had said while appearing before the Canada-China Relations Committee Business earlier this month.
“We recognize that any investment in China needs to be handled with care, sophistication and an acute understanding of the current political and geopolitical environment,” Leduc added.
The pension fund earned net proceeds of C$340 million last year from the sale of six warehouses in Western China, according to its latest disclosure.
Another Canadian pension fund, Ontario Teachers’ Pension Plan, said earlier this month that mainland China allocation represents 2.3% of its total assets and that it is taking a step back from China while pausing further investments in the world’s second-largest economy.
The call was made following the assessment of “the changing post-COVID economic environment, recent regulatory changes in China and the continued deterioration of the U.S.-China and Canada-China relations,” said Stephen McLennan, executive managing director for total fund management at the Canadian pension fund, who appeared before the Canada-China Relations Committee Business early May.
Another Canadian public pension manager making a similar move is British Columbia Investment Management Corporation, which is reportedly halting future investments in China as of now, Bloomberg said.
In addition to its direct investments, CPP committed capital to several pan-Asian private equity vehicles last year, such as Kotak Infrastructure Investment Fund, IndoSpace Logistics Park IV and Carlyle Asia Partners VI.
In transactions following the fiscal year-end, the Canadian pension invested $20 million in Indonesia’s PT Samator Indo Gas and committed $160 million to the latest fund by Indian fund manager Multiples Private Equity. It also made C$181 million by selling a 50% interest in the Kumho Asiana office building in Seoul.
The pension fund achieved a net return of 1.3% in its most recent fiscal year, propelled by its investments in infrastructure, private equity, and credit assets.